Angela Carella: Watch fees when paying taxes online

Published 10:49 pm, Tuesday, January 8, 2013

Stamford residents now may pay their real estate, motor vehicle and personal property taxes online, and soon the city will offer online payments for other bills and services.

Property owners who pay their taxes each January and July received a brochure with this month's bill letting them know that they may go to a website, www.OfficialPayments.com, or call an 800 number instead of mailing a check or delivering one to the tax office in person.

"Official Payments charges a nominal fee for this service," the brochure reads.

But some taxpayers are having a problem with the word "nomimal."

It's true the fee is nominal if you pay online using an electronic check; Official Payments charges $1.95 for that. And most agree that the fee is nominal if you pay online using a debit card. Official Payments charges $3.95 for that.

But if you pay using a MasterCard, Visa, Discover or American Express credit card, the fee "isn't nominal. It's astronomical," a Springdale homeowner said.

The fee for paying taxes online using a credit card is 2.35 percent of the total bill. That means that, if the average homeowner's real estate tax bill is about $7,000 a year, and the homeowner pays it in two installments of $3,500 in January and $3,500 in July, the online fee for paying with a credit card would be $82.25 each time.

"That's completely out of line. I would never pay that," said homeowner Walter Lambert. "Eighty dollars is not nominal, at least not to me. I have no problem bringing a check to the post office or to the government center."

Some taxpayers said the brochure should be more clear about the credit card fee.

The brochure directs residents to the Official Payments website, but Director of Administration Michael Handler, who oversees the tax office, said residents first should visit the city website, www.cityofstamford.org.

"On our website the first thing you see is that a convenience fee is charged and it tells you what it is, based on which payment option you pick," Handler said. "We are clear in giving you the information before you make the payment."

From the city website, you can click on the Official Payments website, which offers a fee calculator.

The city does not make a profit from the convenience fee, Handler said.

"That's the fee the credit card companies passed on to us," he said.

Official Payments Corp. gets a small portion of the fee, said Alex Hart, president and chief executive officer of the Norcross, Ga., company.

"On a $10 credit card fee, we would get $1.25 or $1.50, depending on the bank," Hart said. "Most of it goes to the bank that issues the credit card, the acquiring bank that processes the payment and the credit card companies."

Governments are not allowed to fold the cost of credit card transaction fees into tax bills or service costs, as private companies fold them into the prices they charge for goods and services, Hart said.

"If you go to Target to buy a shirt and use your credit card, you are paying more, but it's built into the cost of the shirt," Hart said. "People don't understand how much they are paying for using a credit card. It's an implicit cost. We are explicit about it."

According to its website, Official Payments provides online payment services to the IRS, 27 states and more than 4,600 municipalities.

His company offers a choice, Hart said.

"Paying with a credit card is not for some people, but there are other ways to pay. We are not trying to convince anyone to do it one way or another," Hart said. "If you enjoy the convenience of using a credit card, if you don't have the cash in your checking account and you want to avoid late fees, it's an affordable option for a lot of people. If you forget, you can pay right up until a minute before the tax deadline. Some people like it because they have reward cards and get miles or points."

Taxes are due Jan. 1 and July 1, with 30 days to pay. So at the end of each January and July, long lines wind around the sixth floor of the Stamford Government Center outside the tax office.

"This is the first of many services we are rolling out so people can pay many bills online," he said. "We hope it's a great first step to making transactions with the city easier."

Some taxpayers may take to it immediately. Others may need convincing.

"I would never pay a percentage fee like that. It doesn't make sense," said homeowner Liberty Gilbert. "I would send the money directly to the city rather than to some company."

"Maybe it will cut back on some of the lines at the government center, but I don't think people will want to use their Visa or MasterCard to pay their taxes," homeowner Carol Sadlon said.

A few may never be convinced. Over the last two years, the tax office has had problems with lost tax payments and mistakenly assigned late fees. Dawn Dugan moved to Stamford from Chicago in 2008 and had a problem right off the bat.

"We never received a tax bill. I went to the tax office to see what was going on and they showed me my bill, but it had the address of the previous homeowner, who had moved to Westport. Apparently, my bill was being forwarded to Westport," Dugan said.

"But the person in the office told me I should have known when my taxes were due and she made me pay the late fee. Now I won't even mail it. I pay it in person. I want a receipt in my hand."